UPDATE 2-New South Africa mines minister pledges strike mediation

Tue May 27, 2014 7:28am EDT

* Mining output records steepest fall since 1967

* Economy shrinks for first time since 2009 recession

* Strike is longest, costliest in S.African history (Adds economy shrinking, strike costs, details)

By Xola Potelwa

JOHANNESBURG, May 27 (Reuters) - New South African mining minister Ngoako Ramatlhodi pledged on Tuesday to mediate in a crippling platinum miners strike now in its fifth month and said the government needed to start treating the AMCU union with respect.

The severe impact of the stoppage was underscored by data on Tuesday that showed South Africa's economy shrank in the first quarter of this year, the first contraction since a 2009 recession, as mining output fell 24.7 percent - its steepest drop in half a century.

Ramatlhodi, who was sworn in late on Monday, also told local radio that mining companies had not done enough "to address the well-being of workers", particularly in relation to the squalid living conditions seen around many mines.

The world's top platinum producers - Anglo American Platinum , Impala Platinum and Lonmin - have been through several rounds of talks with the striking Association of Mineworkers and Construction Union (AMCU) but have made little headway in narrowing the gap in their wage demands.

The strike, which has lasted almost 18 weeks, is now the longest in the history of South Africa's mines. Another round of talks, mediated by a labour court judge, kicked off last week and is still going on.

The stoppage - which has cut global platinum output by about 40 percent - is also sliding into violence, with five non-striking miners killed in the past two weeks.

COUNTING COST

Ramatlhodi, an advocate who served as deputy prisons minister in President Jacob Zuma's previous administration, has a reputation as a gruff nationalist who believes whites retain too much control of Africa's most advanced economy.

He will start strike mediation as soon as he has been briefed on his new portfolio by department officials, he told Johannesburg's Talk Radio 702.

"I will receive a briefing from my team so that I have a sense of the issues that are holding the agreement back and then begin to mediate," he was quoted as saying by the radio station.

"AMCU is a legitimate union. According to the laws of this country, they've qualified to be a player in the mines where they are playing. So government must begin to treat them with respect and give them the dignity that is due to any trade union that qualifies," he told Power FM in a separate interview.

The strike has cost the producers almost 20 billion rand ($1.95 billion) and counting in revenue while employees have lost almost 9 billion rand in wages, according to an industry website that tallies the figures. (here)

Painful restructuring and job cuts are expected when the dust has cleared from the strike, with the focus on Amplats' operations around the platinum belt town of Rustenburg.

($1 = 10.3574 South African Rand) (Additional reporting by Ed Stoddard; Editing by Ed Cropley and Pravin Char)